MF0012 & TAXATION MANAGEMENT

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ASSIGNMENT

DRIVE WINTER	2014
PROGRAM	MBADS – (SEM 3/SEM 5) / MBAN2 / MBAFLEX – (SEM 3) / PGDFMN – (SEM 1)
SUBJECT CODE & NAME	MF0012 & TAXATION MANAGEMENT
SEMESTER	3
BK ID	B 1754
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

1. Explain the objectives of tax planning. Discuss the factors to be considered in tax planning.

2 Explain the categories in Capital assets.

Mr. C acquired a plot of land on 15th June, 1993 for Rs.10,00,000 and sold it on 5th January, 2010 for Rs.41,00,000. The expenses of transfer were Rs.1,00,000.

Mr. C made the following investments on 4th February, 2010 from the proceeds of the plot.

a) Bonds of Rural Electrification Corporation redeemable after a period of three years, Rs.12,00,000

b) Deposits under Capital Gain Scheme for purchase of a residential house Rs.8,00,000 (he does not own any house)

Compute the capital gain chargeable to tax for the AY2010-11.

3. Explain major considerations in capital structure planning. Write about the dividend policy and factors affecting dividend decisions.

4. X Ltd. has Unit C which is not functioning satisfactorily. The following are the details of its fixed assets:

Asset	Date of acquisition	Book value (` lakh)
Land Goodwill (raised in books on 31st March, 2005) Machinery Plant	10th February, 2003 5th April, 1999 12th April, 2004	30 10 40 20

The written down value (WDV) is ` 25 lakh for the machinery, and 15 lakh for the plant. The liabilities on this Unit on 31st March, 2011 are 35 lakh.

The following are two options as on 31st March, 2011:

Option 1: Slump sale to Y Ltd for a consideration of 85 lakh.

Option 2: Individual sale of assets as follows: Land ` 48 lakh, goodwill ` 20 lakh, machinery 32 lakh, Plant 17 lakh.

The other units derive taxable income and there is no carry forward of loss or depreciation for the company as a whole. Unit C was started on 1st January, 2005. Which option would you choose, and why?

5. Explain the Service Tax Law in India and concept of negative list. Write about the exemptions and rebates in Service Tax Law.

6 What do you understand by customs duty? Explain the taxable events for imported, warehoused and exported goods. List down the types of duties in customs.

An importer imports goods for subsequent sale in India at $10,000 on assessable value basis. Relevant exchange rate and rate of duty are as follows:

Particulars	Date	Exchange Rate Declared by CBE&C	Rate of Basic Customs Duty
Date of submission of bill of entry 25th February, 2010 ` 45/$ 8%	25th February, 2010	45/$	8%
Date of entry inwards granted to the vessel	5th March, 2010	49/$	10%

Calculate assessable value and customs duty.

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